SM: We followed tax rules, paid obligations timely, properly
THEY have been compliant with all tax regulations and have paid timely and properly their real estate obligations on their SM Seaside Cebu property.
This is part of SM Prime Holdings Inc.’s answer to allegations by the Cebu City government that it allegedly under-declared its taxable real properties at the South Road Properties (SRP).
“SM Prime has yet to receive an official copy of the complaint. The company maintains that it is compliant with all tax regulations and has timely and properly paid its real estate tax obligations on its SM Seaside Cebu property based on tax declarations and corresponding tax assessments duly issued by the City of Cebu,” said SMPHI’s statement on the city government’s complaint filed at the Cebu City Prosecutor’s Office.
The property at the crux of this controversy is the SM Seaside City, a mall which sits at the heart of SMPHI’s 30-hectare SM Seaside Complex development at the SRP.
Aside from the mall, the SM Seaside Complex is expected to also have a hotel and high rise office and residential buildings to be built within the next five years.
SM Seaside City Cebu opened to the public last Nov. 27, 2015.
The five-level mall, which is SM’s third and biggest in Cebu, has an ice skating rink, cinemas, a multi-purpose theatre venue, two directors’ club for film, a bowling center, a sky park, and a 147-meter viewing tower, among others.
With a gross leasable area of 470,490 sq. m., SM Seaside City Cebu is considered as the country’s third largest shopping mall and eighth largest in the world.
It has over 300 food and retail shops now open, including international brands, drawing an average of 200,000 visitors weekly, with 80,000 coming over the weekend.
Exec’s take on malls
Malls have become an integral part in the lives of people, particularly in urban areas, and play an important role in the overall scheme of things today, said Ma. Elena Arbon, Department of Trade and Industry (DTI) Cebu provincial director, when asked about the contributions of these kinds of establishments to the local economy.
Arbon said these establishments not only create employment but also enhance real property values in urban centers where they are present.
“Malls contribute to the economy. They also improve the quality of life. Malls improve the standing of Cebu City or any other metropolis where they are present because these will be considered amenities,” she told Cebu Daily News in a phone interview yesterday.
Aside from providing avenues for entertainment, dining, banking, and other services, malls also serve as a marketplace for local products.
She said that when a mall gains, its tenants gain as well, and in turn, the city where it is located benefits through real property taxes and sales.
CBRE market view
In its market view for the first half of 2016, real estate advisor CBRE Philippines said upcoming malls provide tourists more accessibility to retail shopping activity and recreation as developers diversify and continue to penetrate the Cebu retail market scene.
CBRE Philippines said Metro Cebu continues to attract significant investments from foreign and local property developers, evidenced by the rising number of pocket communities that will offer residential, office, and retail buildings in one location.
“The accelerated growth of the Philippine economy and its political stability has much to do with setting the environment that is conducive for business,” it said in the report.
SM Prime executives earlier announced that they will next build the SMX Convention Center, which will be as big as the SMX in the Mall of Asia complex with a gross floor area of 25,000 square meters.
The company also entered into a joint venture agreement with Ayala Land for a 26-hectare development at the SRP, which will feature a 16,000-seater arena, convention center, and commercial and residential buildings.
CBRE Philippines predicted that within the next few years, Metro Cebu’s skyline will be filled with mid- to high-rise residential and commercial buildings.
But Cebu City Mayor Tomas Osmeña, who claimed in his complaint that SMPHI only paid P14 million in real property tax for their SM Seaside Property instead of the reassessed value of P37.6 million, said that he filed the case to prove if SM is above the law or not and if big companies can be successfully held criminally liable by the court.
Meanwhile, City Assessor Eleodoro Diaz IV, who assumed office in July, said that SM would not be the only company that the city would subject to this kind of scrutiny.
“It’s not actually just SM. We have a field validation project on this. That’s the mandate of the office. In our conference with the BLGF (Bureau of Local Government Finance), we were encouraged on our efficiency and collection of taxes and other revenues because that matters in budgeting,” Diaz said.
He added that this will continue next year especially since the city has targeted a total revenue collection of P2.1 billion in RPT for next year. This includes those with delinquent tax payments./Reporter Victor Anthony V. Silva with a report from Reporter Jose Santino S. Bunachita
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